Israeli leader plays down gas dispute with Egypt

FILE - In this Monday, July 4, 2011 file photo, flames rise after an explosion near the town of El-Arish, Egypt, 30 miles (50 kilometers) from the border with Israel after unidentified assailants blew up the Egyptian pipeline that carries gas to Israel and Jordan, starting a fire and disrupting the flow of the gas, security officials said. Israel's prime minister is playing down the Egyptian decision to halt gas exports to Israel. Benjamin Netanyahu said Monday, April 23, 2012, that the cutoff was the result of a "business dispute" between Israeli and Egyptian companies.
(AP Photo, File)

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JERUSALEM—Israel's prime minister on Monday scrambled to contain the damage from Egypt's decision to cut off natural gas exports, dismissing the matter as a mere "business dispute" as he tried to prevent a full-fledged diplomatic crisis.

The comments by Benjamin Netanyahu contrasted with earlier statements by Cabinet ministers who warned the Egyptian move threatened to harm already shaky relations between the two nations.

"We don't see this cutoff of the gas as something that is born out of political developments," Netanyahu said. "It's actually a business dispute between the Israeli company and the Egyptian company."

Israel and Egypt signed a historic peace treaty in 1979, and while relations have never been particularly warm, the quiet border has been critical for the security of the two neighbors. Egyptian energy exports to Israel and other business ties have helped keep the peace.

Since longtime Egyptian President Hosni Mubarak was toppled in a popular uprising last year, Israel has grown increasingly jittery about the state of relations with Egypt, particularly since a series of pipeline attacks by Islamic militants have repeatedly disrupted gas shipments to Israel. The rise of Islamic parties in parliamentary elections has added to those fears.

Israeli Foreign Minister Avigdor Lieberman suggested the Egyptian move may be politically motivated because of upcoming Egyptian presidential elections. He told Army Radio he hoped things "will return to the way they were" after the elections on May 23-24.

Late Sunday, Egypt's national gas company said it had cut off exports to Israel, saying its Israeli partner had not paid its bills.

Egypt's minister of planning and international cooperation, Faiza Aboul Naga, said the Egypt has "no objection" to negotiate new conditions and prices regarding its natural gas deal to Israel and has relayed this to Israel. She said the company delivering gas to Israel has failed to pay the fees for five times, and the last deadline was on March 31, which meant that the contract was automatically canceled.

Israeli officials say the payments were halted because repeated attacks by militants on the gas pipeline have all but cut off gas shipments for the past year.

Israel's finance minister, Yuval Steinitz, called the decision a "dangerous precedent that overshadows the peace agreements and the peaceful atmosphere."

That view was echoed by Israeli Energy Minister Uzi Landau. "The pretext is that this is a business dispute, but we see it is not a business dispute," he told The Associated Press, warning that the gas cutoff would worsen power shortages expected this summer and hurt ties between the countries.

Israel and Egypt signed a 20-year agreement for Egypt to provide natural gas to Israel in 2005.

That deal has become a symbol of tensions between Israel and Egypt since last year's uprising. For many Egyptians, it typifies the close relations Mubarak forged with Israel and how his associates benefited greatly from such business deals.

Critics charge that Israel got the gas at below-market prices, a charge Israel denies, and that Mubarak cronies skimmed millions of dollars off the proceeds. Egyptian militants have blown up the gas pipeline 14 times since the uprising more than a year ago.

The repeated disruptions have raised tensions with Israel, which relies on Egypt for 40 percent of its natural gas needs.